2017 will be better than you think

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2017 will be better than you think, with Asia leading the way

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HONG KONG, 16 January, 2017— 2017 will be better than you think, according to Deloitte, who today released the first edition of their Voice of Asia series. Despite protectionist rhetoric from the US and gloomy forecasts from the IMF, three factors suggest global growth is about to surprise on the upside, with Asia leading the way.

Chris Richardson, Deloitte Australia Economist explained that ”first, the global economy is finally normalising after a decade of shocks, and a natural healing process is underpinning a more resilient recovery. Second, world trade is already lifting and the benefits of this are spilling into Asia. And third, Asia’s mega-economies of India and China, are increasingly being powered by consumer booms, acting as a stabilising force in their economies and for the region.”

Global economy stabilising

Following a series of shocks that began with the global financial crisis and then, in quick succession, the Eurozone debt crisis and the geopolitical shocks in the Middle East, Europe and Asia, the global economy is finally normalising. Deloitte’s report predicts that global growth could in fact accelerate in 2017, with leading indicators already pointing to a lift in world trade. This will begin a virtuous circle in which global growth triggers an upsurge in trade which, in turn, fuels stronger growth. Asia’s major markets of China and India are also powering ahead and growth in most other countries in the region are strengthening, aided by a buoyant US economy.

Trade picking up

World trade volumes were damaged by successive crises and shocks in recent years, but leading indicators suggest volumes are ready to lift. Of course, there will still be risks in 2017, the largest of which may be the anticipated depreciation of the Chinese Yuan, which could affect the region’s nascent recovery.

“The continuing devaluation of the Chinese Yuan is necessary, though how the Chinese government manages it will be key. If it’s too aggressive, other Asian currencies may also fall – which could tempt the incoming US President to follow through on his protectionist rhetoric and hit trade,” said Sitao Xu, Deloitte China Economist.

“Asia is increasingly plugged into China-centric value chains. Any impact on China from yuan devaluation or other policy changes could have a significant knock-on effect on other Asian economies. However, in the long run, most economies in Asia will benefit if China succeeds in rebalancing its economy.”

While President-elect Trump is still largely an unknown quantity, his influence on global trade may be overstated. Indicators point to Asian and global trade strengthening, despite the rise of nationalistic and protectionist voices globally.

Consumers booming

Asia’s mega-economies, China and India, are increasingly being powered by consumer booms, providing Asia with an additional line of defence if global growth isn't as good as expected and trade tensions boil over.

Sitao Xu, Deloitte China Economist commented, “A new and optimistic generation is taking the lead in driving the direction of their economies: one that is technologically savvy, comfortable with the borderless consumerism of the global middle class, and yet imbued with the consumption-smoothing instincts of its parents and grandparents.”

The new generation of consumer in Asia will be a stabilising force in their economies, meaning they are likely to play an anchor role for 2017, regardless of other developments.

"There has never been a better time to create a cohesive narrative for Asia - we believe that the themes explored in the Voice of Asia report will shape the debate in this highly interdependent region and help businesses and governments navigate the challenges and realise the opportunities that will underpin Asia’s current and future prosperity,” said Yoichiro Ogawa, Asia Pacific Regional Managing Director, Deloitte Global.

For more analysis and details on the Voice of Asia, please visit Deloitte University Press.

Contact

Chaanah Crichton
Communications Manager, Asia Pacific
Tel: +852 2852 1603
ccrichton@deloitte.com

Local media contacts

Australia:
Simon Rushton
Tel: +61 (2) 9322 5562
srushton@deloitte.com.au
China:
Wayne Lui
Tel: +852 2238 7046
wlui@deloitte.com.hk
India:
Sagarika Mamik Gupta
Mobile: +91 971 128 4005
sagarikagupta@deloitte.com
Japan:
Sachiyo Kikuchi
Tel: +81 903 912 0595
sachiyo.kikuchi@tohmatsu.co.jp
Korea:
Hannah Chang
Tel: +82 (2) 6676 2229
hanchang@deloitte.com
New Zealand:
Matt Huntington
Tel: +64 4470 3771
mhuntington@deloitte.co.nz
South East Asia:
Marie Li
Tel: +65 6800 3717
meijli@deloitte.com
Taiwan:
Elaine Wu
Tel: +886 (2) 2545 9988 ext.2691
elawu@deloitte.com.tw

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Deloitte provides audit, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries bringing world-class capabilities, insights, and high-quality service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 225,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter.

About Deloitte’s Voice of Asia

The Voice of Asia series brings to life the challenges and opportunities facing the Asia Pacific region today and tomorrow. There has never been a better time to create a cohesive narrative that reflects the interdependence of the region and provides a glimpse of what’s possible across Asia.

Edition one of the Voice of Asia includes three reports:

  • Four things you need to know about Asia in 2017
  • Trade to trump protectionists and boost global growth
  • Asia’s weapons of mass consumption
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